Britain’s high streets are facing a devastating blow with more than 17,000 shops expected to close this year amid mounting financial pressures from tax changes.
The Centre for Retail Research forecasts 17,350 store closures over the next 12 months, marking a sharp increase from the 13,479 shuttered in 2023.
“Whilst the results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting – with worse set to come in 2025,” warned Joshua Bamfield of the Centre for Retail Research.
The grim prediction comes as retailers brace for a wave of higher costs following the Chancellor’s Autumn Budget 2024 announcements which saw the introduction of controversial changes to the tax system.
Last year already saw a 28 per cent rise in store closures compared to the previous year, with experts now warning of further deterioration ahead. Consumer champion Which? estimates that more than 6,000 stores have closed since 2015.
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Experts warn more store closures are on their way
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The British Retail Consortium (BRC) has warned that changes to employer National Insurance contributions in Rachel Reeves’s Budget will cost retailers £2.3billion this year.
As part of her fiscal statement, the Chancellor confirmed plans to increase the headline rate from 13.8 per cent to 15 per cent, while also lowering the threshold at which companies begin paying the tax.
Adding to retailers’ financial burden, the 6.7 per cent increase to the minimum wage will impose more than £2.7bn in additional wage costs, according to the BRC.
These mounting pressures come as high street businesses already face significant challenges in maintaining their operations amid the ongoing cost of living crisis.
The Chancellor’s National Insurance raid is under fire
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High street stores are also facing a dramatic increase in property taxes as business rate discounts are reduced.
According to real estate firm Altus Group, the average shop will see its rates bill soar from £3,589 to £8,613 for 2025-26.
Alex Probyn of Altus Group criticised the scaling back of support measures, stating: “Despite [the Labour manifesto’s] recognition of the undue burden business rates place on our high streets, that burden will be significantly increased.”
The decision to reduce targeted relief designed to help smaller retailers was described as “foolhardy” by Altus Group.
Independent retailers are set to bear the heaviest burden of the predicted closures, with 14,660 of the 17,350 expected shutdowns affecting independent shops. The impact on independent retailers was already severe in 2023, when 7,793 independent stores closed their doors.
This represented a 46 per cent increase in independent shop closures compared to the previous year. Separate data from MRI Software indicates that retailers in shopping centres may be particularly vulnerable.
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High streets have been hit by a wave of store closures in the last 10 years
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While overall retail footfall across the UK rose marginally by 0.4 per cent in December, shopping centres experienced a slight decline of 0.1 per cent.
MRI Software’s Consumer Pulse report revealed that 51 per cent of shoppers expressed concerns about rising living costs over the next six months.
The company warned that “the surge in festive footfall may well be the last big splurge for many consumers ahead of what could be a spending freeze heading into early 2025.
“In response to the concerns, a Treasury spokesman defended the government’s approach to business support.
“We delivered a once-in-a-parliament Budget to wipe the slate clean and deliver the stability businesses so desperately need,” the spokesman said.
The Treasury highlighted that without their intervention, business rates relief for retail, hospitality and leisure would have ended in April this year.
Instead, they are extending 40 per cent relief for 250,000 properties and introducing a new permanently lower business rate in 2026.
The spokesman also emphasised that “more than half of employers will either see a cut or no change in their National Insurance bills.”
